Air Canada, union working to avoid strike

MONTREAL – Air Canada was heading towards its first strike in more than a decade amid last-minute negotiations between the airline and 3,800 customer service agents and other airport workers.

The two sides have reached agreement on some workplace issues but the major stumbling blocks of wages and pensions were still outstanding as the sides continued talks Monday at a downtown Toronto hotel as a midnight strike deadline approached.

“We did a lot of work but it just seems to me that we should be moving a little bit quicker than we are right now,” Ken Lewenza, president of the Canadian Auto Workers union, said in an interview.

He said the union’s proposal submitted Sunday, which he declined to detail, aims to provide members with pension security and wage increases after a decade of uncertainty.

The national union leader said he was hopeful that a deal could be reached but acknowledged there was “a huge gap” between the two sides on the two key issues.

“The demands on the pensions have diverted a lot of our attention but at the end of the day our members have had 10 years of significant sacrifices,” he said.

“Now it’s time to make some progress (and) wages are a big key to getting an agreement.”

Air Canada declined to discusses the issues being negotiated, but said it was working towards a settlement that “respects our employees and ensures Air Canada’s long-term sustainability without a labour disruption.”

The country’s largest airline has said it has a contingency plan to continue operating a full schedule if there were a strike.

In the event of a strike, the carrier urges passengers to check with its website because a high volume of calls could make it a long wait to get through to its call centres.

Technology would also help since self-service tools on the website can be used for making bookings along with self-service check-in at airports.

But Lewenza said a strike would invariably have an impact on Air Canada’s operations.

“Anybody who thinks it’s business as usual when 3,800 members are on strike, I don’t think is being very realistic.”

Under the airline’s proposal, new hires would receive defined contribution pension plans instead of the defined benefit plans current employees have.

Defined benefit plans are designed to provide retirees with a predictable income, but they expose the airline to additional costs if the pension fund’s assets aren’t able to pay for the benefits.

With defined contribution plans, the airline’s contribution is limited to a set, negotiated amount and payouts to retirees depend on the performance of the underlying investments.

Air Canada has about $13 billion in pension commitments to 26,000 active employees and 29,000 retirees. Estimates in January found that the plan is underfunded by about $2.1 billion.

Union officials have said the airline wants to also gut the pensions of current workers.

Air Canada was forced into creditor protection from April 2003 to September 2004, due in part to the cost of dealing with the company’s pension deficit.

The company’s unions agreed to accept numerous concessions worth billions to help the company to survive, but they insisted their defined benefit pension plans be saved.

Negotiations with unions representing other workers are also strained. Pilots rejected a tentative agreement that, in part, calls for new rules permitting the establishment by Air Canada of a low-cost carrier.

The Canadian Union of Public Employees — which represents 6,800 Air Canada flight attendants — also recently asked for a federal conciliator to assist in its contract talks with the airline.

Federal Labour Minister Lisa Raitt has said she’s concerned about the potential impact of a work stoppage at Air Canada on Canadians and on Canada’s economic recovery.

Industry observers believe the government could intervene to end the strike.

Chris Murray of PI Financial Corp. said he expects the Conservatives would act quickly, but he still believes a negotiated settlement is possible and that the strike deadline may be extended.

“My inclination right now is that they’ll be coming to a settlement in short order. One way or another it will be a short strike, even if there is one,” he said in an interview.

While a strike by customer service employees may cause delays, Murray expects the airline will be able to maintain operations.

“A strike from any of the other groups, be it the pilots, the flight attendants or the maintenance people, that would be a much more significant issue.”

Meanwhile, the head of rival WestJet also said he believes any work stoppage would be short lived and the airline doesn’t plan right now to add extra service to deal with a possible Air Canada strike.

“We’ll fly extra sections if demand warrants it (but) we’re not counting our eggs before they hatched,” said CEO Gregg Saretsky said after addressing the Toronto Board of Trade.

On the Toronto Stock Exchange, Air Canada’s shares closed down 7.7 per cent, or 15 cents, at $1.79 in Monday trading.